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Thursday, January 16, 2014

Statement of Opposition to AB 596

Below is RENEW's statement on AB 596, a bill to expand the universe of renewable energy credits that utilities can use to comply with Wisconsin's Renewable Electricity Standard. The bill would allow utilities to apply renewable energy credits from certified generators toward their renewable electricity requirements, irrespective of when the generator was placed in service. The current PSC rule on renewable energy credits permits utilities to apply renewable energy credits created by qualifying generators only if they were placed in service in 2010 or after.

Statement of RENEW Wisconsin in Opposition to AB596
Assembly Committee on Energy and Utilities
January 9, 2014

RENEW Wisconsin leads and represents businesses, organizations, and individuals who seek more clean renewable energy in Wisconsin. RENEW Wisconsin has been advancing a sustainable energy future for Wisconsin since 1991. Of our 300+ members, more than 60 are companies headquartered in Wisconsin.

Wisconsin’s renewable electricity standard (RES), which requires electricity providers to increase their renewable energy supplies by six percentage points, has been the primary mechanism for expanding renewable energy’s share of the state’s electric energy resource mix. I say “has been” because the utilities are now effectively in full compliance with the law’s 2015 target, according to the Public Service Commission. Without a change in the 10% target, We Energies’ 50 MW biomass generation plant at Rothschild, which was placed in service in late 2013, shapes up to be the last utility-owned renewable power plant leveraged by the RES. As of this moment, none of the electric providers subject to Wisconsin’s RES has publicly announced plans to expand their renewable generation portfolio.

The aim of AB 596 is to allow renewable energy credits created by qualifying renewable facilities older than 2010 to be applied to Wisconsin’s RES. Because these facilities are already producing renewable electricity today, the adoption of this bill would not add new kilowatt-hours to the state’s renewable energy supplies. Moreover, as noted above, Wisconsin’s electricity providers are already in compliance with the state’s Renewable Electricity Standard. Therefore, they have no need for the renewable energy credits (REC’s) that would be created through the adoption of AB 596.

RENEW does not object in principle to policy changes that allow electricity providers to acquire RECs created by older generators for the purpose of satisfying their renewable energy requirements, provided that there is a need for this additional supply of RECs. But that need would be created by raising our 10% standard, which AB 596 does not do. Absent any provision to increase the RES above its current levels, this legislation would have no practical effect on utility resource decisions if adopted.

This legislation begs the question: what is the logic behind creating new REC’s without creating a rationale for electric utilities to use them?

We would support the provision proposed here if it were grounded in legislation to expand the current RES. Sadly, no growth in the RES is contemplated in this bill, which is why we oppose it.

Why is an expanded RES off the table?

Surely it can’t be the experience of neighboring states. Wisconsin’s electricity rates are at the high end among Upper Midwest states, yet it has less installed wind power per capita than its neighboring states.

In 1999, Wisconsin was the first Midwest state to adopt a Renewable Electricity Standard. In 2006 the Legislature strengthened the standard, from 2.2% by 2011 to 10% by 2015. Between that time and today, it has been a highly effective mechanism for creating jobs, spurring demand for locally manufactured equipment, and increasing the flow of tax revenues and supplemental income into rural landowners and businesses. All the economic and environmental objectives that can be achieved with a 10% standard have been achieved. But the current RES has no capacity left to leverage new supplies of renewable electricity, and the only way to continue reaping the benefits of a cleaner, healthier and less financially risky energy mix is to expand and extend this policy tool.  Such a move would not be rash or radical; indeed, Wisconsin has done it before. 

Other states are not sitting still. By the end of 2014, renewable energy is expected to account for more than 30% of Iowa’s electricity. By 2020, Minnesota will become the regional powerhouse for solar. By every economic measure, those two states are outpacing Wisconsin, and their cleaner, lower-cost energy mix is a significant element in their ability to attract and sustain new investments. If Wisconsin is serious about competing with Iowa and Minnesota for new jobs and business opportunities, it needs to put itself back on a growth track for renewables, and a higher RES is the best vehicle for accomplishing that.  The current policy drift on energy is not going to get the job done.

Respectfully submitted,

Don Wichert
RENEW Wisconsin Board member

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